INTERNATIONAL FINANCIAL REPORTING STANDARDS AND INTERNATIONAL ACCOUNTING STANDARDS

International Financial Reporting Standards (IFRS) and International Accounting Standards (IAS) are two closely linked sets of accounting standards created by the International Accounting Standards Board (IASB), an independent international standard-setting body. The transition from IAS to IFRS indicates a commitment to attaining worldwide uniformity and consistency in financial reporting procedures (IFRS, 2024).

International Accounting Standards (IAS): 

IAS refers to the original set of accounting standards produced by the International Accounting Standards Committee (IASC) before the foundation of the IASB in 2001. These standards were established to meet the requirement for a consistent framework for financial reporting, encouraging uniformity and comparability across different jurisdictions. IAS covered several financial reporting aspects, including recommendations for companies on topics such as revenue recognition, financial statement presentation, and accounting for specific transactions (IFRS, 2024).

International Financial Reporting Standards (IFRS): 

IFRS is a more complete and evolving set of accounting standards that superseded IAS. The IASB, founded to replace the IASC, takes on the role of maintaining and establishing international accounting standards. IFRS includes the original IAS and offers new standards and changes to meet evolving accounting difficulties. The basic purpose of IFRS is to develop a single set of high-quality, globally accepted accounting standards that promote transparent and comparable financial reporting across borders (IFRS, 2024).

Key Differences: 

While IAS set the basis, IFRS expands upon it by addressing new concerns and enhancing current rules. IFRS has achieved widespread acceptability globally, with numerous countries adopting or converging towards its standards. The continuing development of IFRS ensures that accounting procedures maintain pace with the growing corporate environment. Moreover, IFRS includes a specific set of standards known as IFRS for Small and Medium-sized Entities (IFRS for SMEs), suited to the needs of smaller enterprises.

Global Applicability: 

IAS had a more restricted impact originally, but its influence endures in some regions. In contrast, IFRS has become the accepted standard for financial reporting in many nations globally. The global applicability of IFRS helps to a more consistent and comparable portrayal of financial information, benefitting investors, analysts, and other stakeholders in making informed decisions.

Continuity and Evolution: 

The shift from IAS to IFRS implies a commitment to continual development and adaptation to changing business landscapes. The IASB's continued efforts to modify and strengthen global accounting rules show its devotion to ensuring transparency, comparability, and reliability in financial reporting procedures on an international scale.